Item 2.02. Results of Operations and Financial Condition. As previously disclosed, Unilife Corporation (the “Company” or “we”) has incurred recurring losses from operations as well as negative cash flows from operating activities. As of March 31, 2017, the Company’s unaudited cash balance was approximately $6.3 million, including $2.4 million of restricted cash. The Company believes its existing cash as of March 31, 2017 will not provide the Company with sufficient liquidity to fund the Company’s operations past the week ending April 7, 2017 without the Company falling below the minimum cash and restricted cash balance requirements of $5.1 million under its debt facilities. If we fall below such minimum cash balance requirements we would be in default under one or more of our debt obligations unless we are able to obtain waivers from our lenders. A breach of any of the covenants related to our debt instruments could result in a higher rate of interest to be paid or the lenders could elect to declare all amounts outstanding under the applicable agreements to be immediately due and payable. If the lenders were to make such a demand for repayment, we would be unable to pay the obligations as we do not have existing facilities or sufficient cash on hand to satisfy these obligations. Under the circumstances, we also would be unable to pay our other obligations as they come due, which could prompt our creditors to pursue other remedies. Also as previously disclosed, the Company actively has been seeking financing with the assistance of a financial advisory firm but to date has not obtained any financing commitment. In addition, on Friday, March 31, 2017, the Company received notice from a key customer for wearable injectors that such customer is putting a program with the Company on hold for reasons unrelated to the Company’s products. Given the relative importance of such program, such delay may negatively impact the Company’s ability to obtain financing or the amount of financing the Company may be able to obtain. Because to date the Company has not obtained a financing commitment to fund the Company’s operations on an ongoing basis, the Company is exploring bridge financing alternatives. The Company may obtain bridge financing from ROS Acquisition Offshore LP (“ROS”), an affiliate of OrbiMed Advisors (“OrbiMed”). This bridge financing, if obtained, is likely to be in the form of debtor-in-possession financing in connection with a proceeding concerning the Company under Chapter 11 of the United States Bankruptcy Code (the “Code”). There can be no assurance that this bridge financing will be provided, the terms under which it may be provided or what form it will take. It is possible, but not likely, that the Company will obtain a financing commitment outside of a Chapter 11 process, but the terms of such commitment, if any, may not be favorable to the Company or its stockholders. If the Company is not successful in obtaining bridge financing or does not obtain a commitment for other financing in the near-term, the Company would be forced to file a petition for relief under Chapter 7 of the Code. Any reorganization, sale, or liquidation is unlikely to result in funds being available to the Company’s stockholders or to creditors of the Company other than its secured creditors. Item 2.05 Costs Associated with Exit or Disposal Activities On April 4, 2017, the Company issued a Worker Adjustment and Retraining Notification (“WARN”) Act notice (the “Notice”) to all employees of the Company and state and local government agencies, that if the Company is not successful in obtaining financing, the Company will be forced to permanently close both its York, Pennsylvania and King of Prussia, Pennsylvania facilities. The Notice begins the 60-day notice period that is contemplated to be given prior to permanently closing operations under the WARN Act. Unless the Company obtains financing sufficient to continue busi ness operations, it is expected that the closure of the Company’s facilities will occur on or about June 4 , 2017. On April 4, 2017, the Company terminated the employment of an aggregate of 51 employees at its York, Pennsylvania, and King of Prussia, Pennsylvania locations. The Company expects to record a charge related to terminated employees of approximately $0.6 million in connection with the Notice. The Company does not expect a material difference between the cash impact and the charge to be recorded.
UNS Price at posting:
3.6¢ Sentiment: Sell Disclosure: Held
